JUDGMENT S. C. PANDEY J. - This is a reference under section 44(1) of the M. P. General Sales Tax Act 1958 (hereinafter referred to as "the Act") at the instance of assessee. The following questions of law have ban referred to this Court by the Board of Revenue : "1. Whether, under the facts and circumstances of the case, the Tribunal is justified in holding that the supply of material to contractors and fabricators for construction of factory building and office and residential quarters of the assessee constituted sale liable to tax under the Act ? 2. Whether, under the facts and circumstances of the case the assessee can claim any benefit under Notification No. 2990-3935-V-ST, dated September 17, 1977, so as to exempt the assessee from payment of sales tax on the building materials supplied to its contractors/fabricators ?" 2. The facts of this case are that the assessee, M/s. Hindustan Steel Limited, Bhilai Steel Plant, Bhilai, is a public undertaking incorporated under the Indian Companies Act. It is a registered dealer under the Act. Prior to the enforcement of the Act it was registered under the C.P. and Berar Sales Tax Act as a registered dealer. The assessee was constructing buildings for the office as well as residential quarters during the period between 1969-70 to 1979-80. The constructions of the aforesaid buildings were carried through the contractors and fabricators. The assessee used to supply materials to the contractors and fabricators and the value of these materials was deducted from the bills submitted by these persons. The assessee was assessed to sales tax under the Act and also turnover tax on the materials issued to contractors/fabricators for the period of 1969-70 to 1979-80 by various assessment orders dated December 28, 1981 (1969-70) December 28, 1981 (1970-71), July 30, 1977 (1971-72), July 30, 1977 (1971-72), August 31, 1977 (1972-73), August 26, 1978 (1973-74), July 28, 1978 (1974-75), July 28, 1978 (1974-75), December 6, 1980 (1975-76), July 30, 1981 (1976-77), July 30, 1981 (1976-77), December 31, 1981 (1977-78), December 31, 1982 (1978-79) and December 31, 1983 (1979-80). In the first appeal the Appellate Deputy Commissioner of Sales Tax, Raipur, passed a combined order for the period 1969-72 to 1978-79 and a separate order for the period 1979-80. All these appeals were disallowed. 3. The assessee filed a second appeal against all these orders before the Board of Revenue. In the first appeal the Appellate Deputy Commissioner of Sales Tax, Raipur, passed a combined order for the period 1969-72 to 1978-79 and a separate order for the period 1979-80. All these appeals were disallowed. 3. The assessee filed a second appeal against all these orders before the Board of Revenue. Before the Board of Revenue the assessee relied on the decision of the High Court reported in [1971] 27 STC 478 (Commissioner of Sales Tax, Madhya Pradesh v. Hindustan Steel Limited, Bhilai Steel Project, Bhilai) and [1973] 31 STC 426 (SC) (State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of india Ltd.) and contended that the supply of building materials to its contractors/fabricators did not amount to sale. It was contended in the alternative that the assessee was exempted from the payment of sales tax vide Notification No. 2990-3935-V-ST, dated September 17, 1977. 4. The Board of Revenue held that the supplies of building materials made by the assessee to its contractors/fabricators amounted to sale and, therefore, sales tax was leviable. It also held that the assessee is not entitled to exemption from payment of sales tax under the aforesaid notification because that notification exempted payment of purchase tax on these goods contained in the Schedule II, purchased by a dealer from the Department of Central or State Government or Public Undertaking. The assessee cannot claim the benefit of exemption under the notification, from payment of sales tax. Under the notification only a dealer is entitled to claim the benefit of exemption. The assessee was not such a dealer. The order of Bead of Revenue for the periods 1969-72 to 1978-79 was passed on December 5, 1984 and for the period 1979-80 was passed on March 20, 1985. 5. The assessee moved an application for reference in all these cases and these cases have been referred to this Court. This order shall also govern disposal of M.C.C. Nos. 679/87, 680/87, 681/87, 682/87, 683/87, 684/87, 685/87, 689/87, 690/87, 691/87, 692/87, 693/87, 694/87, 695/87, 696/87, 697/87 and 698/87 on the questions already stated. 6. The learned counsel for the assessee argued that as per the agreement between the assessee and the contractors/fabricators there was no transfer of property of the goods to the contractors/fabricators and, therefore, these transactions did not amount to sale. 6. The learned counsel for the assessee argued that as per the agreement between the assessee and the contractors/fabricators there was no transfer of property of the goods to the contractors/fabricators and, therefore, these transactions did not amount to sale. The goods in question belonged to the company and the contractors were merely supplied the goods for constructions of the buildings and, therefore, the question of taxing under "the Act" for sale of goods did not arise. The learned counsel for the assessee relied on a decision in the case of Commissioner of Sales Tax, Madhya Pradesh v. Hindustan Steel Limited, Bhilai Steel Project, Bhilai reported in [1971] 27 STC 478 (MP) and distinguished on Commissioner of Sales Tax v. Mohammad Zahoor reported in [1975] 36 STC 414 (MP); [1975] 8 VKN 301. In the alternative it was submitted by the learned counsel for the assessee, in any case the assessee is entitled to exemption from payment of tax under the Notification No. 2990-3935-V-ST, dated September 17, 1977, whereby the purchase from the State Government or public undertaking was exempted. Since the purchases from the public undertaking in respect of the goods sold to the contractors or fabricators were exempted from payment of purchase tax, therefore, the assessee could also claim benefit of a notification and claim exemption from payment of sales tax. In this connection learned counsel drew the attention of this Court to an unreported judgment in the case of Wallace Flour Mills Co. Ltd. v. Regional Assistant Commissioner of Sales Tax in M.P. No. 80 of 1966 decided on September 29, 1969 and urged that since the aforesaid notification too exempts payment of tax on goods under section 12 of "the Act" and, therefore, sale was also exempted from payment of tax. In the submission of the learned counsel, the State Government had chosen to exempt the class of goods mentioned in the notification under section 12 of "the Act" and once they have been exempted from payment of purchase tax, it automatically followed that the goods are also not liable for payment of sales tax too. In the submission of the learned counsel, the State Government had chosen to exempt the class of goods mentioned in the notification under section 12 of "the Act" and once they have been exempted from payment of purchase tax, it automatically followed that the goods are also not liable for payment of sales tax too. The learned counsel relied upon the following observation of this Court : "2 The contention of learned counsel for the respondent is that by this notification its transactions of sale by the depot alone are exempt from tax; that means, the dealer is exempt from paying the sales tax, but the purchaser is not exempt from the purchase tax. We are unable to agree with this contention. If the intention of the Government had been to exempt a particular dealer from paying the tax at the time of sale, the Government could have by the notification exempted the Central Reserve Depots from paying tax at the time of the sale. But that has not been done. On the other hand, it is the goods which have been declared to be exempt from payment of tax. When goods are exempt from payment of tax, neither sales tax nor purchase tax can be charged on those goods at that point of sale. 3. The same conclusion is reached by reading section 7 of the Act, under which purchase tax is chargeable. The relevant part of section 7 is as follows : "(1) Every dealer who in the course of his business purchases any taxable goods from a registered dealer in circumstances in which no tax under section 6 is payable on the sale price of such goods or from any other person and either consumes....shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 6 :" For the application of section 7, two things are essential : (1) that the goods which the assessee purchases must be taxable, and (2) that in spite of the goods being taxable circumstances exist under which the seller is not liable to pay sales tax under section 6. In the present case, as stated above, under the notification the goods are exempt from tax. The first condition, therefore, is not applicable. In the present case, as stated above, under the notification the goods are exempt from tax. The first condition, therefore, is not applicable. That being so, section 7 is not attracted and therefore no purchase tax is payable on the goods in question. 7. The learned Government Advocate supported the view taken by the Board of Revenue for the reasons given by it. 8. The answer to the first question whether the assessee is liable to sales tax or not depends upon the agreement between the assessee and the contractors/fabricators. The answer to this question has to be given in the context of the agreement between the parties. Clause 51(1) of the general condition of the contract is also a part of agreement between the appellant and the contractor/fabricator which reads as follows : "51(1) If the specification or estimate of the work provides for the use of any special description of materials to be supplied from the Engineer's store, or if it is required that the contractor shall use certain stores to be provided by the Engineer (such materials and stores and plants and the prices to be charged therefor as hereinafter mentioned being so far as practicable for the convenience of the contractor but not so as in any way to control the meaning or effect of this contract specified in the schedule or memorandum hereto annexed), the contractor shall be supplied with such materials and stores as required from time to time to be used by him for the purpose of the contract only this being calculated out from specifications, drawing, etc., and the value of the full quantity of materials and stores so supplied at the rates specified in the said schedule or memorandum may be set off or deducted from any sums then due, or thereafter to become due to the contractor under the contract, or otherwise, or against or from the security deposit, or the proceeds of sale thereof; if the same is held in Government securities, the same or a sufficient portion thereof being in this case sold for the purpose. All materials supplied to the contractor shall remain the absolute property of the employer, and shall not on any account be removed from the site of the work, and shall at all times be open to inspection by the Engineer. All materials supplied to the contractor shall remain the absolute property of the employer, and shall not on any account be removed from the site of the work, and shall at all times be open to inspection by the Engineer. Any such materials unused and in perfectly good condition at the time of the completion or determination of the contract shall be returned to the Engineer's store, if by a notice in writing under his hand he shall so require; but the contractor shall not be entitled to return ay such materials unless with such consent, and shall have no claim for compensation on account of any such materials so supplied to him a aforesaid being unused by him, or for any wastage in or damage to any such materials." The similar clause No. 10 which reads a follows : "If the specification or estimates of the work provides for the use of any special description of materials to be supplied from the Engineer-in-Charge's store, or if it is required that the contractor shall use certain stores to be provided by the Engineer-in-Charge (such materials or stores, and the prices to be charged therefor as hereinafter mentioned being so far as practicable for the convenience of the contractor, but not so as in any way to control the meaning or effect of this contract specified in the Schedule or memorandum hereto annexed), the contractor shall be supplied with such materials and stores a required from time to time to be used by him for the purpose of the contract only, and the value of the full quantity of materials and stores so supplied at the rates specified in the said Schedule or memorandum may be set off a deducted from any sums then duel, or thereafter to become due to the contractor under the contract, or otherwise or against or from the security deposit. All materials supplied to the contractor shall remain the absolute property of the company, and shall not on any account be removed from the site of the work, and shall at all times be open to inspection by the Engineer-in-Charge. All materials supplied to the contractor shall remain the absolute property of the company, and shall not on any account be removed from the site of the work, and shall at all times be open to inspection by the Engineer-in-Charge. Any such materials unused and in perfectly good condition at the time of the completion or determination of the contract shall be returned to the Engineer-in-Charge's store, if by a notice in writing under his hand he shall so require...." was considered by Supreme Court in the case of Hindustan Steel Ltd. v. State Of Orissa, which is a sister concern of the assessee, reported in [1970] 25 STC 211. This clause was interpreted by the Supreme Court to the effect that the transactions amounted to sale within the meaning of section 2(g) of the Orissa Sales Tax Act 1947. Their Lordships of the Supreme Court after quoting the definition of "sale" which is identical with that of sale under section 2(n) of the Act, held that : "The company supplied building material to the contractors at agreed rates. There was concurrence of the four elements which constitute a sale : (1) the parties was competent to contract; (2) they had mutually assented to the terms of contract; (3) absolute property in building materials was agreed to be transferred to the contractors; and (4) price was agreed to be adjusted against the dues under the contract. No serious argument was advanced before us the the supply of budding material belonging to the company for an agreed price did not constitute a sale." It may be pointed out that the decision of the High Court relied upon by the assessee reported in Commissioner of Sales Tax, Madhya Pradesh v. Hindustan Steel Limited, Bhilai Steel Project, Bhilai [1971] 27 STC 478 (MP) was rendered on April 28, 1970 and the decision of the Supreme Court was rendered on April 14, 1970 [See [1970] 26 STC 302 (SC)]. In view of the decision of the Supreme Court the decision of the High Court in Commissioner of Sales Tax, Madhya Pradesh v. Hindustan Steel Limited, Bhilai Steel Project, Bhilai [1971] 27 STC 478 (MP) appears to have been impliedly overruled. In view of the decision of the Supreme Court the decision of the High Court in Commissioner of Sales Tax, Madhya Pradesh v. Hindustan Steel Limited, Bhilai Steel Project, Bhilai [1971] 27 STC 478 (MP) appears to have been impliedly overruled. The Supreme Court has already held that the materials supplied to the different contractors by the company would be covered by the definition of "sale" within the meaning of section 2(c) of the Orissa Sales Tax Act, 1947. The definition of "sale" is almost identical under section 2(n) of the Act. Section 2(bb) of the Act has defined "business" under "the Act" which was not defined in the Orissa Act of 1947 at the time the Supreme Court decided the case. The definition of "business" inserted under section 2(bb) of "the Act" operates from April 15, 1965. It makes the profit element no longer an essential criterion for running the business. An the ingredients of the "sale" are fulfilled in this case and the assessee is a "dealer". 9. In view of the aforesaid discussion the answer to the question No. 1 would be in the affirmative and the assessee will be held to be liable to pay sales tax on the materials supplied by it to the various contractors/fabricators. 10. The second question that survives for consideration is whether the assessee is entitled to claim benefit of the exemption granted by the Notification No. 2990-3935-V-ST dated September 17, 1977, which reads as follows : "No. 2990-3935-V-ST, dated the 17th September, 1977. 10. The second question that survives for consideration is whether the assessee is entitled to claim benefit of the exemption granted by the Notification No. 2990-3935-V-ST dated September 17, 1977, which reads as follows : "No. 2990-3935-V-ST, dated the 17th September, 1977. In exercise of the powers conferred by section 12 of the Madhya Pradesh General Sales Tax Act, 1958 (No. 2 of 1959), the State Government hereby exempts, from payment of tax, in whole, the purchases of the class of goods specified in column (1) of the Schedule below for the period specified in column (2) thereof : SCHEDULE ----------------------------------------------------------------------- Class of goods Period (1) (2) ----------------------------------------------------------------------- Goods specified in Schedule II, when From 1st April, 1959 purchased by a dealer from any department to 31st March, 1978 of the Central or State Government, (both days any local authority or any inclusive)." undertaking in public sector for use in construction of a budding or other work of the like nature for such department of the Central or State Government or such local authority or such undertaking in public sector and proved to the satisfaction of the assessing authority that the goods have been so used. ------------------------------------------------------------------------ It may be readily seen from the notification that it exempts only purchase tax. Therefore, it is necessary to define purchase tax, leviable under section 7 of the Act. The language of section 7 is somewhat involved. However, the meaning of the section 7 is fairly clear. The purchase tax is leviable where no sales tax is payable under section 6 of the Act on sale price of the goods. Section 7 of the Act as stood then is applicable in the following circumstances. The language of section 7 is somewhat involved. However, the meaning of the section 7 is fairly clear. The purchase tax is leviable where no sales tax is payable under section 6 of the Act on sale price of the goods. Section 7 of the Act as stood then is applicable in the following circumstances. A person on whom the liability to pay purchase tax falls - (i) he must be a dealer, (ii) he must make purchase in the course of business, (iii) such purchase must be either from a registered dealer or any other person, (iv) the goods purchased must be taxable under "the Act", i.e., tax must be imposed by Legislature on these goods at the rates as per Schedule II, (v) the purchase must be in a circumstance when no tax is payable under "the Act", And the dealer either may - (a) consume the goods in the manufacture of other goods for sale or otherwise, Or (b) despatch the goods in any manner otherwise than by way of sale in the State, Or (c) despatch them outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce. It may thus be readily seen that one of the most important conditions for levy of purchase tax is that the goods should not be liable to sales tax. We have already held that the goods and materials supplied by the assessee-company to the contractors/fabricators amounted to sale and, therefore the question of levy of purchase tax did not arise. The contractors and fabricators will not be liable to pay any purchase tax and, therefore, the question of exempting them did not arise. However, it does not follow from this alone that the State Government meant to exempt the goods from payment of sales tax. The express language of this notification is in regard to the purchase tax. Nothing prevented the State Government from issuing a notification if it wanted to exempt the goods from payment of sales tax as well a purchase tax to say so expressly in the notification. The express language of this notification is in regard to the purchase tax. Nothing prevented the State Government from issuing a notification if it wanted to exempt the goods from payment of sales tax as well a purchase tax to say so expressly in the notification. If it wanted these goods should not be liable to any tax at all then it could have issued a similar notification as was issued in the case of Wallace Flour Mills, relied upon by the learned counsel for the assessee, in M.P. No. 80 of 1966 (decided on September 29, 1969 - Madhya Pradesh High Court). That Notification No. 1024/901/V-ST, dated April 19, 1963, reads as follows : "No. 1024-901-V-ST, Bhopal, dated the 19th April, 1963, 29th Chaitra, 1885. In exercise of the powers conferred by section 12 of the Madhya Pradesh General Sales Tax Act, 1958 (No. 2 of 1959), the State Government hereby exempts, in whole, the class of goods specified in column (1) of the Schedule below from payment of tax for the period specified in column (2) and subject to restrictions and conditions specified in column (3) of the said Schedule : SCHEDULE ----------------------------------------------------------------------- Class of goods Period Restrictions and conditions subject to which exemption is granted. (1) (2) (3) ----------------------------------------------------------------------- All kinds of From 1st April, 1963 When sold by Central foodgrains, cereals to 31st March, 1964 Reserve Depots of the rice and paddy. (both days inclusive). Government of India situated in Madhya Pradesh." ----------------------------------------------------------------------- It may be noticed that in this notification merely purchase tax has not been exempted from payments of tax but the goods have been exempted from payment of tax. In view of this matter, the Division Bench of this Court rightly held that the assessee was not liable to pay purchase tax because the goods have been exempted from payment of tax whether it be sales tax or purchase tax. 11. Paragraphs 2 and 3 quoted above in M.P. No. 80 of 1966 formed complete answer to the argument of the learned counsel for the Revenue in that case. The assessee does not get any assistance from the decision in this case. On the other hand, the observations in paragraph 2 of that case supports the case of the Revenue. 11. Paragraphs 2 and 3 quoted above in M.P. No. 80 of 1966 formed complete answer to the argument of the learned counsel for the Revenue in that case. The assessee does not get any assistance from the decision in this case. On the other hand, the observations in paragraph 2 of that case supports the case of the Revenue. In that case their Lordships were of the view of the notification under their consideration had exempted the Central Reserve Depot from payment of sales tax alone then the dealer would have been liable to pay purchase tax. On the other hand, contrary was the case. Thus, that case is distinguishable. 12. The Notification No. 2990-3935-V-ST, dated September 17, 1977, is not applicable to the assessee's case as its agreement amounted to sale. It would be applicable to the case of those dealers where the sales tax is not payable as a result of agreement not amounting to sale or by law or in case of exemption from payment of sales tax. In this particular case we have interpreted the agreement between the assessee-company and the contractors/fabricators to the effect that the goods supplied by the company to them amounted to sale. We have followed the decision of the Supreme Court in this case. However, in several other cases the language of the agreement may be different and supply of materials by the concerned public undertaking or a Government department may be on different terms which may not amount to sale. This notification, therefore, would apply to the purchasing dealers subject to such agreement who would be deemed to be exempted from payment of a purchase tax under the notification. The Supreme Court in [1993] 88 STC 98; AIR 1993 SC 1048 (Hotel Balaji v. State of Andhra Pradesh) supports our conclusion in paragraphs 65 and 66 (at pages 134-135 of STC). It was observed as follows : "65. Broadly speaking, the effect is : Tax payable at sale point becomes the tax payable on the purchase point, in certain circumstances. Because, the seller is not or cannot be taxed for certain reasons, the purchasing dealer is being taxed. Two example, each illustrating one of the two situations envisaged by the section may be given : (a) Andhra Pradesh Dairy Development Corporation, a registered dealer, is exempted from paying the tax on sale of pasteurised milk. Because, the seller is not or cannot be taxed for certain reasons, the purchasing dealer is being taxed. Two example, each illustrating one of the two situations envisaged by the section may be given : (a) Andhra Pradesh Dairy Development Corporation, a registered dealer, is exempted from paying the tax on sale of pasteurised milk. The purchaser of pasteurised milk from the Corporation is taxed provided he satisfies one of the conditions specified in clauses (i) to (iii) mentioned in the section, thereby becoming the last purchaser in the State of such milk. (b) Fresh milk is taxable at sale point. But when it is sold by a farmer/agriculturist raising cattle on lands held by him, he cannot be taxed because he is not a dealer. The purchaser taxed in such cases provided he satisfies one of the conditions specified in clauses (i) to (iii) in the section, thereby becoming the last purchaser in the State of such milk. 66. It would, therefore, be clear that the real object of the clauses (i) to (iii) in the section is not to levy a consumption tax, use tax or consignment tax but only to point out that thereby the purchasing dealer converts himself into the last purchaser in the State of such goods. The goods cease to exist or cease to be available in the State for sale or purchase attracting tax. In these circumstances, the purchasing dealer of such goods is taxed, if the seller is not or cannot be taxed. In this connection, observations of P. S. Poti, J., in Malabar Fruit Products Co. v. Sales Tax Officer [1972] 30 STC 537 (Ker); 1972 Tax LR 2202 (Ker), which have been expressly approved by this Court in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191; AIR 1975 SC 1871 - discussed in detail in Part V may be referred to. It is not necessary to set out the said discussion here over again." 13. In view of this discussion our answer to question No. 2 is against the assessee and in favour of the Revenue. 14. As a result of decision aforesaid we answer both the questions in favour of the Revenue and against the assessee. Reference answered in favour of Revenue.